I distinctly remember the smile on my face after I received my first post-college pay check. My four years of hard work and determination had finally come into fruition; manifesting itself in the form of my first paycheck as a working professional. Opening my paycheck’s envelope, I felt as if I was on cloud 9 and I would rule the world. It was a marvelous feeling.
Here’s the truth: When you graduate college, your life truly begins. You are awarded the opportunity to build the life of dreams in anyway you seem fit. Pretty cool huh? In order to build your dreams, it’s imperative that you understand money, as money is essentially dream fuel. Below are five essential money tips for new college grads that are designed to put you in a position to one day achieve financial freedom and live the life of your dreams. Read on to learn more!
Budget Budget Budget
I’m guessing budgeting isn’t a suggestion that you haven’t heard before. That being said, maybe everyone that you heard advising budgeting was actually on to something. Budgeting is essentially making yourself aware of how much money you bring in and how much money you need to pay out to your expenses. This is a good thing because when you aren’t aware of your budget, you are putting your financial freedom in jeopardy.
More than half the battle of financial success is being keenly aware of your budget. Here are few suggestions of categories to include when making a budget in relation to your monthly income.
- Food cost
- Rent cost
- Utilities cost
- Transportation cost
- Entertainment cost
- Student loans cost
- Insurance cost
- Savings cost
Remember, when it comes to financial health, small leaks sink large ships. Be aware of your budget.
Pay Off Debt
Debt is your mortal enemy; seriously, pay off your debt as quickly as possible. The sooner you do, the paychecks you bring in will suddenly pack more punch and give you more spending power. Having high debt and not paying it off quickly not only reflects poorly on you, but you also end up paying more through interest. A good tip to follow is to only purchase goods you can afford; this takes away the urge make payments on the credit card.
Shoppers, this paragraph is for you. Use your superior shopping skills to find the best deals in town so you can save money. The more money you save, the more money you have to pay off your debt and establish an emergency fund or invest for retirement. Be creative when it comes to saving. Instead of spending money going out on the weekends, invite people over your house. Instead of buying food for one meal, learn to shop and cook in bulk. Instead of buying brand new clothes, choose second hand options or find an incredible deal. Whatever you do, make sure you save money.
Create an Emergency Fund
Do you remember growing up playing the board game called Life? While playing Life, one would occasionally draw a card and a hidden expense would pop up costing you money. Real life is very similar; it behooves you to establish an emergency fund. Conventional wisdom says to save at least three to six month’s worth of paychecks so if an emergency does arise, you’ll become finically stable enough to endure the tough times. Emergency do happen, make sure you are prepared.
Plan for Retirement
I never thought I live to see the day where I consciously decided to plan for retirement. “I’m too young for this.” I always thought. Boy, was I wrong. It is never too early to plan for retirement. If your company offers a 401k program, invest in it. It’s free money. I advise you to learn as much as you can about assets and money. Work with a financial advisor who will help you learn the steps to take that are necessary to retire. New England College has great programs to teach you about finance and how to apply this knowledge in the real world. Knowledge is power, learn as much as you can about money; it’s what makes your dreams come true.